Tyre maker Ceat to stick to marginal price hikes

Ceat Ltd, India's fourth largest tyre maker, plans to continue 1-2% price hikes of its tyres having decided big price increases unfeasible, a senior official said on Friday.                                           

High prices of natural rubber has played havoc with profit margins of tyre makers with domestic rubber prices jumping nearly 50% so far this year.                                           

On Thursday India cut import duty on natural rubber to 7.5% from 20% for shipments up to 40,000 tonnes until March 31 to ease supply.                                           

"We have raised prices marginally in December. A big price hike is not workable, minor price hikes will continue," said Arnab Banerjee, executive director, operations, at Ceat.                                           

The duty will be reinstated at whichever is the lower of 20% or Rs20 per kg after March 31, 2011.                                           

Banerjee said there was no opportunity to import rubber immediately as domestic rubber was cheaper for the tyre industry, though it was a good step for the long term.    

"I do not think there is any opportunity to import immediately even under the changed notification. After February we may have an opportunity so we will evaluate at that point of time".

Ceat shares ended up 2.9% at Rs136.8 in a firm Mumbai market.